Dax Technical Analysis 02/03/2015

I’m still in shock at the incredible flow of money into German equities, especially with the incredible perils of financial meltdown only partially covered up. Sweeping things under the carpet doesn’t work, but as traders I guess we capitalize on and work with whatever situations are presented to us.

Some analysts predict Dax will get to 14k maybe even 15k assuming similar percentage gains to that of the SPX. Others bring us back to the Greece issue. The fact remains that low bond rates are pushing more people into equities and with ECB buying up billions every month, I suspect the trend will continue. Corrections and pullbacks will provide opportunities to buy more positions. If you are long, consider taking profits temporarily. If you are short, then be cautious of further moves before the correction happens.

This week I will trialing a premium piece of software that will attempt to dynamically provide support & resistance based signals across all time frames. Screenshots and analysis will be provided below, initial signs are encouraging, I just want to see whether it’s another money pit or whether any value can be extracted from it.

My personal opinion: I think we have room to go higher and I am still Bullish. I am watching for pullback levels to buy and accumulate.

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Support & Resistance

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KEY LEVELS

Difference

Daily R2

11461

48

Daily R1

11423

154

Daily Pivot

11363

347

Daily S1

11325

453

Daily S2

11265

646

24hr VWAP

11344

77

Naked VPOC

11338

17

Value High

11356

23

Value Low

11303

74

200 Day EMA

9887

35

34 Hour EMA

11310

74

Daily Dax Chart Analysis

Slightly concerned with the over valued nature of the market at the moment, but will ride it as long as I can. We have touched the rising trend channel top and are threatening the fork top as well. The oscillators are over 70 but we have seen these overbought levels before so I am beginning to ignore them. There was an interesting volume spike on Friday, which can usually, not always, point to the start of a reversal. Strong argument for a correction soon, or at least a pullback. At this rate, we are looking at having to amend the trajectory of the bullish channel to fit price action and that starts to reek of bubble.

Dax Daily Chart

Daily Intra-day Analysis (30 minutes)

I have highlighted a buy zone for my first swing long. I wouldn’t be surprised if we took off towards 11500 before reaching the 11k zone again, but I think somewhere near 11k is reasonable for a pullback. I am happy to enter a long there to test for a bounce. If we go deeper, I will consider cutting and adding from lower levels. See below for more reasons why I like this level.

Dax 30-minute Chart

Dax Intra-day Chart Analysis (5-minutes)

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I have highlighted a few areas of support/resistance based on 4-hour fractals and I like the 11076 which is a previous area of short-term support as it also currently sits at the 50% retracement level from the recent swing. I like this as an almost perfect balance point right now, which could provide a decent high probability setup for a long position, if we do get a pullback.
Dax 5-minute Chart

Dax Intra-day Chart Analysis (1-minute)

Not much to go into here, except to see the daily pivot levels and a simple rising trend channel, which we are currently in the bottom half of.

Dax 1-minute Chart
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Volume Profile Chart Analysis

Low volume pocket right beneath us, but the area has proven stubborn to break. Mark the area on your chart as it could provide quick points if 11378 is broken (11356-11375 is the low volume area). Another option would be that we can not break the area and build higher from here. The previous days low volume pockets are still valid.

Dax Volume Profile Chart (5 minute)
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New Dax Trading Indicator Review

New Indicator – Daily Chart

I have picked up a copy of a new toy.

This is a trading strategy/system. Overall it looks to be based around a dynamic regression channel feature which looks great with its various coloured deviation bands that mould to the shape of price action which helps to see clearly, at a glance, what price is doing on a bigger picture, and it shows potential support & resistance. Then we have a modified RSI indicator which is coloured to provide a timing signal for a trade and the final one is a coloured ‘moving average’ indicator which shows the underlying trend.

Simple system rule 1: buy only in uptrends, sell only in downtrends. Rule 2: Buy signal when price is at the green (bottom of channel) and sell signal when price is in the red (top of channel). Rule 3: If previous rules are followed, then enter buy trade when oscillator is under 30 and enter sell trade when oscillator is over 70. let me be honest here, I am not the biggest fan of systems, in fact I dislike them a lot. So I am sceptical, but I have promised to give it a chance (possibly on a demo account first).

I will need to be up front here, I have been given a complementary copy of this product to review and test, but it does cost $88USD to buy which may put one or two people off, but at least you’ll get the screenshots here for free. My early impression is good, they guy is pretty helpful, good instructions, easy to install etc, now we see if it’s any good. If you are interested in the product, then learn more about it: Click Here!

My understanding is this is more useful/accurate on higher time frames (but usable on any) and can be used on any market. So let’s try this on the Dax and see what happens this week.

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And there it is, the Dax is on its way back up past 12k and it now seems fairly likely that we can build higher from here. The positions we entered from Friday and Thursday are looking like they will hit the targets and life is good again.

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Another strong bearish day yesterday and now we have the makings of a pullback. However we are bearish below 10,250 so it could be an opportunity for traders to sell from higher levels. We have attempted to take back the 10k level and it’s acting like a magnet. I think the piercing around 11 has set the tone for the day.

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Disappointing ZEW data had little impact on the already poor start to the morning yesterday and we recovered strongly overall to post a bullish looking candle on the daily chart, once again touching the extremely influential 200 EMA.

Hi David, that’s a great question. I believe at this stage it will only work on a windows operating system, which I think is a bit of a let down. But I will talk to the developer and see if there as any alternative for you, if you are using a mac.

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